It’s great that so many family businesses emphasize customer service, interpersonal relationships, and hard work, but “being nice” and “working harder” are only two of the dozens of growth strategies available to today’s entrepreneur. The bad news is that these nice, hard working people are often losing ground. While competitors are growing exponentially through acquisitions, joint ventures, strategic alliances, roll ups, initial public offering and franchising, the leaders of many family-owned businesses continue to conclude that they can only grow organically and incrementally.
Three Reasons Family-Owned Businesses Often Conclude They Can Only Grow Incrementally
The growth strategies that involve multiple companies require the participants to make decisions quickly. The pacing of joint ventures, strategic alliances, acquisitions and roll ups is impacted by external factors, such as financial markets, resource professionals involved in the process, the interpersonal relationships between representatives of the participating companies, group dynamics, market conditions, etc. It can become difficult to match the pace of one’s external partners if internal relationships and group dynamics are bogging down your company’s decision making. Some leaders of family-owned businesses are so preoccupied with the evolving role(s) of siblings, the development of an heir apparent, or delegation issues within their family that the establishment of important working relationships outside the family seems unimaginable.
Some business owners jump to the conclusion that aggressive growth strategies will automatically result in loss of control over the future of their business. This is particularly important to leaders of family-owned businesses that feel a strong sense of responsibility for the stewardship of the family legacy. Over the 30+ years that I have been specializing in helping companies in Achieving Accelerated Growth With Sustained Profitability®, I have seen numerous situations in which the leaders of acquired companies had more control over their fate after they had been acquired. Similarly, participants in roll ups, where several similar companies combine to go public, can also retain control over their geographic area, product line, employees, etc. If this is possible when firms are acquired or publicly traded, why couldn’t control be retained when a family business is doing the acquiring, leading the joint venture, or serving as the franchiser? So much depends on the terms of the deal. The skill and experience of the facilitators, attorneys and accountants involved can make all the difference in the world when it comes to retained control.
Some family owned businesses resist more aggressive growth strategies because they “prefer to be fiscally conservative.” This is especially true for family-owned businesses that carry larger payrolls due to family members who may not be carrying their weight or have retired. Ironically, some seemingly aggressive growth strategies (like acquisitions that are funded on the receivables of the acquired company) do not involve the outlay of great amounts of money and can result in the infusion of much needed cash. Growth through acquisition does not automatically occur to even the brightest leaders of family-owned businesses if they are worried about cash and meeting payroll.
Four Ways to Expand the Growth Options for a Family Business
To grow a business, it is important to become more MARKET-DRIVEN. This process can be difficult for companies that do not have the added responsibility of family care taking. However, periodic customer surveys and focus groups to determine their likes, dislikes, needs and future direction can help your company make the transition.
Growing a business involves embracing change. This, too, can be difficult for non-family-owned businesses but can be particularly tough for family-owned companies with leaders who want things to remain as they have always been. Aggressively addressing the underlying causes of resistance to change is needed before specific growth strategies can be explored.
Growth demands decisions, delegation and communication. It is important to address any dysfunctional patterns that have become habitual before an investment in growth is considered because dysfunctional patterns can sabotage growth strategies.
Business growth requires learning on the part of the leaders involved. So many businesses are not growing because key people are so busy running the day-to-day operation that they haven’t taken the time to learn about new opportunities, see other ways of looking at resources, etc. I find that leaders of family-owned businesses often underestimate their own capacity to learn or assume that new growth strategies will be too complex for them to consider. From what I have experienced, working with over 100 family-owned businesses, intelligence is not the problem. Some of the brightest, most dedicated, hardworking people lead family-owned businesses.
But working harder is only one of several growth strategies available to today’s family-owned business.
Known as The Growth Strategist®, Aldonna R. Ambler, CMC, CSP helps rapidly growing midsized companies (typically $20 – 200 million/year) realize their goal of Achieving Accelerated Growth With Sustained Profitability® through opportunity/resource analysis, executive coaching, strategic working sessions, and her intermediary role regarding growth financing. Her clients are among the brightest, most ambitious business leaders whose names now appear on published lists of the fastest growing privately held corporations. The recipient of 23 prestigious awards for her success as an entrepreneur and industry leader, Ambler hosts a peer-to-peer Internet radio program, aptly called The Growth Strategist®, which features lively interviews with CEOs of midmarket companies who have successfully executed the growth strategy of the week. She can be reached toll free at 1-888-Aldonna (253-6662), by e-mail at Aldonna@AMBLER.com or online at www.TheGrowthStrategist.com